Company’s financial state forecasting: methods and approaches

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Planning company’s activity is a complex process, in which foresight is of great importance. The paper presents a method to predict financial state of a company using available financial data. For the prediction of quantitative indicators of the company currently there are different ways to build predictive models, such as simple and multiple regressions, autoregressive model and others. In this paper, to predict financial indicators of the company we use econometric modeling techniques. Tools to check the time series for the seasonality and stationarity are used in constructing the models. To check the reliability of the analysis techniques applied backtesting. To apply the developed method we used the values of financial indicators of the Kazakh national oil producing company. However, the method can be used for any company despite its size, industry, and so on. Albeit the method proposed is universal one and enables to predict financial state at any company, it has certain shortcomings and should be used along with fun¬damental analysis tools. The method proposed in the paper illustrated adequate results with sufficient accuracy according to the backtesting results. Therefore, based on the results of forecasting the financial state indicators, one can conduct a financial analysis of the expected state in upcoming period and use the derived values for future planning.

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    • Figure 1. Financial state indicators forecasting process chart
    • Table 1. Backtesting of the model adequacy